Businesses in the north-east are facing a “catastrophic” multi-million pound tax bombshell as a new framework for property rates comes into force.
An expert has warned that a number of firms risk going bankrupt or having to make further job cuts at a time when hundreds of thousands in the region have already been put out of work due to the oil price crash.
Companies like oil and gas operator Apache North Sea, based at the Prime Four business park at Kingswells, Aberdeen, will see their non-domestic rates bills rocket.
The rateable value (RV) for Apache’s offices has increased by 47% to £2.2million, according to assessments seen by Eric Shearer, a partner at property firm Knight Frank.
Apple’s store in Union Square shopping centre, is also facing a whopping rise in its business rates after its RV increased by £200,000 to £350,000.
The increases are the result of new RVs which take effect from April. RVs are the base figure used to calculate rates, with other factors affecting the final figure.
Aberdeen and surrounding firms will be disproportionately hit as RVs are based on an assessment at April 2015 – when the commercial property in and around the city remained at “the top of the market”, before it fully adjusted to the slump in oil prices.
Other areas of Scotland, have seen drops in commercial property values.
Aberdeen-based Mr Shearer said the valuations taken last year were not likely to be incorrect and that a delay in the rates, which has been implemented by the Westminster Government in England and Wales, is the only solution.
“The only way we can save ourselves here is transitional relief, which will introduce it gradually,” he said.
“Seriously, this will mean bulldozing buildings in Aberdeen and lots and lots of firms going out of business. It is going to be catastrophic.”
Lorna Greig, rating expert with property firm Ryden said: “Proposed increases in RV have come at the worst possible time for Aberdeen and the north-east.”
Last night, a north-east MSP called the new rates a “hammer-blow” to struggling businesses in the region.
Ross Thomson said: “What this is, is another example of how the current SNP government are politically out of touch and also economically out of their depth.
“We need to encourage a renaissance in oil and gas and we need to support people who have been made redundant, have skills and need to find work, and now what they want to do is whack massive taxes onto businesses in the north-east.
“All the SNP do to the north-east is take, take, take, there’s no real support for our region – this is a hammer-blow, particularly at a time when we are most in need of support.
“Businesses feel they are being penalised and what I don’t want to see is a ‘brain drain’ where people are moving south of the border or to other parts of the country because of the tax situation up here.”
A Scottish Government spokesman said: “It is for councils to apply rates reductions, on top of existing statutory reliefs, as they see fit. Individual business rate payers can, of course, appeal their valuation if they feel it is incorrect.
“The Scottish Government remains committed to supporting the economy in the North East, including the Aberdeen City Deal and the additional £254million investment announced alongside. We are also investing £745million in the Aberdeen Western Peripheral Route.”